By Joyce Deuley

While we’ve been talking for a while about the rollups within IoT markets as inevitable facts in a maturing industry, we are seeing it in action. Yesterday, Avago announced its plans to purchase its rival semiconductor maker, Broadcom, initiating the largest acquisition in the semiconductor industry’s history. This is following a series of other massive acquisitions by the Singapore-based company, such as the Emulex buyout at $609 million, as well as its purchase of LSI Logic for $6.6 billion. It is definitely safe to say that Avago is churning up massive waves within the semiconductor industry.

The acquisition will close out Broadcom’s 15-year legacy, though both Founders, Henry Samuli and Henry Nicholas, will continue to stay on as CTO and advisor to new CEO, Hoc Tan respectively. According to Nicholas, he is confident that, “under the visionary leadership of Hoc Tan, the combined company will realize its potential to be the world’s greatest semiconductor company,” (Forbes); the greatest semiconductor company indeed. While both companies are both valued roughly around $30 billion, this combined company, Broadcom Limited, is expected to garner $15 billion in revenue and will be valued at $77 billion overall. Talk about explosive growth. Hoc Tan’s visionary role at Avago began with the $2.6 billion takeover in 2006 by KKR & Co. and the Silver Lake Partners. After the economic downturn in 2009, Avago was one of the first companies to go IPO on Nasdaq and since then, it has seen almost 800% growth, excluding dividends, (Forbes).

There are some regulatory concerns that could arise, particularly since both companies were such close competitors, but it is easy to see the strength behind this move. Both companies operate within wired and wireless communication markets, integrating Wi-Fi and Bluetooth technologies together in chipsets for connected devices across multiple markets. Broadcom focuses within consumer and home electronic markets, as well as the small cell market (though, they’ve cut back on their cellular broadband recently). Avago offers a wide array of RF semiconductor devices that can both amplify and filter radio frequency signals across wired and enterprise storage markets. Avago has been growing at a faster pace than Broadcom, but through the acquisition, Broadcom will secure Avago heavy-hitting customers, such as Alcatel-Lucent, Apple, Cisco, Huawei, Samsung, and ZTE. According to Tan, with the “unparalleled engineering powers of Broadcom with Avago’s heritage of technology from HP, AT&T, and LSI Logic,” (Mobile World Live).

Going forward, the deal is expected to close at the end of the first quarter in 2016, so while the it seems solid now, there’s definitely room for the tide to change. Additionally, we can expect to see more "tsunamis" within the semiconductor industry. While the Avago/Broadcom acquisition is deeply impactful (look at those numbers!), it follows NXP Semiconductor’s aggressive pickup of Freescale Semiconductors for $118 billion, pushing the company to the front lines within connected auto and consumer markets. This is just the beginning as we expect more companies to gobble up the competition, leaving a more structured, clear-cut market in their wake.